|Vol. 16 No. 62||
Thursday August 3, 2017
Final Countdown For Air India
As the government prepares for the final countdown of the Air India sale slated for the end of March 2018—the national carrier is burdened with a massive debt of Rs 50,000 crore ($751.6 mn)—the move has raised the hackles of the carrier’s unions.
Letter To Minister
A letter to the Civil Aviation Minister Ashok Gajapathi Raju (left)
dated June 14, 2017, from a forum of seven unions—AI Air Corporate
Employees’ Union, AI Employees’ Union, AI Aircraft Engineers’
Association, United Air India Officers’ Association, AI Engineers’
Association, AI Cabin Crew Association, and AI Service Engineers’
Association—predicts “massive protests” if the government
moves ahead with the NITI Aayog’s (the National Institution
for Transforming India, the premier policy ‘Think Tank’
of the government) suggestion to sell off the national carrier.
Losses Trimmed PAX Business Up
Pointing out that
the government’s move would mean the death of the 64-year-old
national carrier, the letter went on to state that the sale had come
at a time when it was “showing all-round progress, profitability
and over 33 percent increase in the numbers of passengers.”
Private Sector Mouthpiece?
Squarely blaming the Niti Aayog for being a “spokesperson of
the private sector,” the unions’ missive said that the
body was acting “unilaterally, arbitrarily, and illegally”
and had not sought the views of the stakeholders in the sale move.
The Long & Winding Road
The Air India sale
story has seen many twists and turns. The carrier has received financial
infusions from the government and worked out plans for a turnaround,
but nothing has helped. However,
over the last fortnight, the government has adopted a fast-forward
mode with the Civil Aviation Ministry preparing a Cabinet note that
would decide the future action for the debt-ridden national carrier,
including possible privatization.
Major Write-off In The Wings
Meanwhile, the Cabinet note mentioned that the government had decided to write off almost half of the carrier’s estimated liabilities of Rs 60,000 crore ($9019 mn). “While the write-off is of the carrier’s liabilities not backed by assets, the government might also incur an expenditure for the settlement of the sovereign-backed part of AI’s aircraft loan of about Rs 21,000 crore ($3156 mn),” the official pointed out.
Let’s Make A Deal
Apparently those who lent to the carrier have reportedly had “informal talks with the government” and expressed their willingness to negotiate Air India’s loan settlement, including the re-setting of interest rates. Incidentally, according to a rough estimate by the Civil Aviation Ministry, the Maharaja’s assets—including its 115-strong aircraft fleet, land parcels, buildings, flying/landing rights, and parking slots at airports across the world—“are worth around Rs 25,000-30,000 crore ($3758 mn - $4509 mn).”
Of The Minority?
One of the major issues
the government will have to resolve is of holding a minority stake
in the carrier.
Singh A Song Of Air India?
The rule—along with a recent interview with SpiceJet Chairman
Ajay Singh—has given rise to widespread belief that SpiceJet
could be one of the buyers of Air India if it is put up for sale.
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